The Dirt on Travel Insurance

Ah…to enjoy your next vacation with or without travel insurance – that is the question. Nothing is going to happen to you when you’re enjoying your vacation, we know that. But what if? As with all insurance, it is a gamble. There are those who have made claims and swear by it, and others who avoid insurance like the plague.

In the world of travel insurance, no two policies are the same. Different activities and locales are covered in different ways between insurance companies, and even within the same company you can see different terms and conditions. The information below will help you sift through the weird and crazy world of travel insurance.

Different Kinds of Coverage

There are three main types of travel insurance you can decide on your needs for.

Trip Cancellation

Trip Cancellation insurance is often offered to you at the time of booking your flight, and in many cases is not available to you after the ticket is purchased. It will refund all or a part of your non-refundable travel costs if you need to cancel your trip or cut it short due to a personal or family medical emergency. There are tons of stipulations around the coverage, how and when it’s purchased, and what is consequently covered. However if it is an expensive trip involving long-haul flights, it may well be worth your while.

Baggage Loss/Theft

With this type of insurance, the value (or a portion thereof) of your travel belongings is reimbursed to you upon loss, damage, or theft of your loot. How the stuff is valued for reimbursement purposes varies, and coverage also changes according to how or where it was lost. Expect to provide purchase receipts and pictures or other forms of proof of ownership before getting any money back. You will usually have to wait 48 hours before even being able to file a claim, so if your luggage was lost and you’re sick of wearing the same outfit you flew in, you will likely have to shell out some bucks out of your pocket for new clothes that won’t be covered. All in all, unless you are travelling with some really expensive stuff, this type of insurance is more of a hassle than a help. Besides which, you may already have this coverage…see below for more information on that.

Accident / Medical Emergency

This is the most commonly purchased (and arguably practical) type of travel insurance, and covers or reimburses unexpected medical expenses incurred during your trip. If it was an accident, what you were doing or where you were doing it when you were hurt matters; some policies cover sports like skydiving and scuba diving while others don’t. Certain locations in political turmoil or getting hurt during a terrorist attack might also be off the list of covered events. And if you become ill, don’t expect to see a cent from the insurance company if they can prove that the illness was a result of or related to any pre-existing conditions.

However having said all that, you can’t anticipate some accidents or medical conditions cropping up, and if you are in a foreign country, are prone to heart attacks, or participating in a hazardous activity, this coverage may be worth its weight in gold.

How Much Should You Pay

The older you are, the more you can expect to shell out for Accidental/Medical insurance. Likewise though, you will statistically have a greater chance of making a claim too. The general rule of thumb is that the cost of your travel insurance should be around 5% of the cost of your trip.

I remember talking to a fellow who was travelling with his 90 year old mother. The cost of insurance for her was astronomical (definitely more than 5%), but he justified the cost because of her age and health, knowing how much it would cost him if he were uninsured and something happened to her. Peace of mind is not to be underestimated when making travel insurance decisions.

Things to Consider Before Buying

You may already have coverage. As I alluded to in another article (and as pointed out in the comments to a more recent post), you may automatically have some travel insurance coverage by virtue of charging your trip to your credit card. You may also already own the coverage through your existing health insurance plan, home owner’s insurance, or even life insurance. It is worth a call to each of these insurers to find out if you have coverage, so as not to over-insure yourself and spend money on premiums where it need not be spent.

Here are some questions to ask your credit card company:

Do you provide travel insurance and what does it include?

Does it cover family members traveling with me?

Do I have to purchase my flights on that credit card for the trip to be covered?

What are the limitations?

Ask this of your health insurer:

Am I covered outside of the country?

Does the service coverage include ambulance?

Are there any limitations?

Is airlift available and included in an emergency?

Questions for your rental/homeowner insurance company are following:

Does my policy cover my belongings when I take them out of the house?

Does my policy cover my baggage if it is lost or delayed during a vacation?

How long do my bags have to be missing before I can make a claim?

What will I need to provide in order to make a claim?

If I pack valuables, such as art or jewellery, are they covered?

And finally, some questions for your life insurer are:

Am I covered if I die in a foreign country?

What are the benefits - and limitations - should I die or suffer loss of limb in an accident abroad?

In the case of death (overseas or in-country), will my policy cover the cost to ship my body home?

Do I Really Need It?

Armed with the information above, the decision to buy travel insurance is an individual one and full of grey areas. Here are some questions for you to ponder:

What are the chances of something happening while you are away?

Do you have a sick parent or sibling, whose untimely death might cut your trip short?

Are you in good health but generally aging, such that an accident abroad might take a greater toll on you?

Or are you travelling to a country where medical expenses are pricey (like anybody traveling to the US from another country), or where access to medical care is remote and would entail an expensive airlift?

Lastly, are you planning on participating in any higher-risk sports or activities that might increase your chances of getting hurt?

Okay, So I Need Travel Insurance…

Having done the leg work to determine that you still need or want coverage, next comes the daunting task of comparing quotes, policies, and offerings.

I found a few interesting resources for getting comparative quotes at Insure My Trip (through which I purchased my most recent travel insurance plan) and World Nomads. I also checked out what Travel Cuts had to offer, and they have relatively easy-to-understand lingo in their fine print.

Things To Remember…

Remember, please do go over the policy’s terms with a fine tooth comb before signing on the dotted line. Each company will differ in their terms, and even within one company there can be discrepancies between plans.

Once purchased, it is important not only to carry the policy number and claims/info telephone number with you at all times while travelling, but also to leave the same information with somebody at home. That way if something happens and you can’t wrestle with the claims department yourself, you have somebody at home who can advocate on your behalf. And always – always – call the insurance company as soon as something happens that could result in a claim. Sometimes they won’t cover you if you incur a medical expense before calling them first or are taken to a hospital that’s not on their list.

Happy Travelling!

Disclaimer: I have no vested interest in travel insurance or any of the sites mentioned.

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Guest #1

Make sure you get the emergency/medical kind. I know someone who fell and broke his neck in South America, was paralyzed and had to be flown on a medical flight with a doctor, a nurse and a respiratory therapist. All this to the tune of $110,000, which luckily he had.

I usually only spring for travel insurance when I am traveling internationally. The Medical Evacuation it the big one that can seriously put a financial hurting on you (like the poster above mentioned).

Most of the times when I am traveling within the country, issues like a flight delay or lost luggage are manageable (but still no fun).

Like Nora, I've generally had pretty good luck with InsureMyTrip. I like the fact that you can compare the different policies side by side so if you are looking for some specific things, you can see which one suits you best.

I had a good experience with RBC Insurance when I had to stay in Melbourne one extra night because of a cyclone grounding flights into Darwin. I was reimbursed for the extra cost of accommodation by simply supplying receipts when I got back. I could have handled the extra cost but the entire insurance policy basically paid for itself right then.

Great article! Like Nora says, travel insurance policies are full of exclusions that can limit your claims. If you're going to enjoy higher-risk sports or activities make sure your policy covers them!. A lot of policies exclude sports like parasailing, bungee jumping, and even hiking!

How long could I get a plan in USA and then supplement with travelers insurance for? All the international health insurance companies in the USA seem to have dodgy reviews. It is about 120 USD for a 5000 deductable plan in USA and then about 30 USD for travel insurance per month.

I work for a Canadian travel insurance company myself (Travel Underwriters), and I agree with everything mentioned above.

I always stress that travel insurance policies are not created equally. Ask your broker any questions that you may have (no matter how seemingly insignificant they may seem at the time) so you have a proper understanding of exactly what you’re getting. Some policies may not be right for you, so you should explore other options.

Price shouldn’t be your only basis in choosing a travel insurance policy–it should also be what that policy contains, and how suitable it is for you.